What is NFT? All the NFT knowledge you need to invest in
- 1. What is NFT?
- 2. What is the origin of the NFT?
- 3. Features of NFTs
- 4. Why is NFT valuable and expensive?
- 5. What is the difference between NFT and Cryptocurrency?
- 6. Working mechanism of NFT
- 6.1 Authors are free to determine the number of copies of the work
- 6.2 Authors will receive royalties in each exchange
- 7. Application of NFT in life
- 7.1 Art
- 7.2 Gaming
- 7.3 Digitizing real assets
- 8. Advantages of NFT
- 8.1 Maximizing profits for authors
- 8.2 Emphasis on Copyright
- 8.3 Leveraging the Potential of the Game Market
- 9. Some risks when participating in the NFT market
- 10. How to choose NFT games with potential
- 10.1 Through the community of players
- 10.2 Through the company that owns the game
- 10.3 Through Token price change
- 11. Some prominent NFTs in the market
- 11.1 AXS - Axie Infinity
- 11.2 Chiliz - CHZ
- 11.3 Theta Network - THETA
- 11.4 Flow - FLOW
- 11.5 Enjin Coin - ENJ
What is NFT? Why is it called the new technology era product? This is many people's question when participating in the Cryptocurrency market. In this article, BHO Network will provide readers with necessary information about NFT so that you can invest wisely or create your own NFT to increase your income. Follow along!
1. What is NFT?
What does NFT mean? NFT, which stands for Non-fungible token, is a non-fungible asset. The most notable thing about NFT is its uniqueness; it cannot be replaced. Let's take a look at this example to understand it better.
NFT attracts users because of its non-copyable and non-replaceable feature
Usually, fiat currencies or Cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) are all "Fungible" in nature. That is, it is infinitely reproducible and therefore wholly replaceable. For example, 1 BTC is exchanged for another 1 BTC, and the value remains unchanged. However, NFT is a different story. Each NFT will be given a unique digital signature, associated with a unique identifier, and has a unique owner.
Furthermore, NFT is protected by Blockchain, which functions as a ledger to authenticate the asset's identity and the owner, allowing no one to change the information. In general, two features cannot be copied and cannot be replaced. NFT has asserted its position through scarcity, making investors search for and willing to pay the highest price to own this property.
2. What is the origin of the NFT?
The most primitive idea of NFT started in 2012 with the Colored Coin project founded by Yoni Assia. However, this project soon failed because Bitcoin did not support this project.
The Ethereum ERC-721 standard underpins NFT
Using Blockchain to claim property ownership is an innovative idea deserving attention, investment, and development. Hence, in 2014, Bitcoin launched the Counterparty transaction technology, allowing investors to use or create their trading value assets.
The NFT concept was partly formed and reinforced by the new ERC-721 standard of the Ethereum Cryptocurrency. This standard allows users to trade their assets on the Ethereum Blockchain. Therefore, it must be said that Ethereum currently holds the number one position in trading and storing assets on Blockchain.
3. Features of NFTs
Here are essential characteristics that new and established NFT market entrants need to know:
- Scarcity: The value of NFTs largely stems from their scarcity. Usually, NFT founders can create an infinite number of non-fungible tokens. But they will often limit the number of these tokens to increase the scarcity of the asset.
- Indivisible: Most of these non-fungible tokens are not divisible into smaller units. For example, an investor can only choose between buying a single piece of NFT art and not buying them instead of splitting them up.
- Uniqueness: All NFTs have a unique digital signature, identifier, and owner. Blockchain is responsible for recording and validating all this information.
The three most prominent features of the NFT coin are scarcity, indivisible and unique
4. Why is NFT valuable and expensive?
NFT is expensive because it is a unique item with great collectible value. In addition, it provides the right to be the sole owner of the work; no one can copy it. As with other speculative products, the owner has the right to buy and sell for a profit when the value increases.
For example, many people can buy a famous painting because it is printed and sold in many art shops. However, only one person is the original owner of the work.
NFT is expensive because it is a unique item and has excellent collectible value
5. What is the difference between NFT and Cryptocurrency?
Although NFT and Cryptocurrency are both products that Blockchain technology brings, their purpose of birth and use is entirely different.
NFT and Cryptocurrency is different in terms of birth and use purpose
The purpose of Cryptocurrency is currency, allowing users to store value and use it as a means of payment to buy and sell items, Crypto assets. Cryptocurrency tokens fall into the "Fungible" category, like fiat money—for example, US Dollar or Vietnam Dong.
In contrast, NFT generates unique Tokens, which are non-substitutable to represent ownership and transfer or transfer ownership of multiple digital assets.
6. Working mechanism of NFT
NFT has a unique operating mechanism; let's learn more about BHO Network in the content below.
6.1 Authors are free to determine the number of copies of the work
As noted above, one thing that makes NFT expensive and valuable is the scarcity in its supply. Supply is the number of copies hitting the market that the NFT founder will decide.
To make it easier to understand, try to imagine yourself on the board of a sporting event. You will then have complete control over how many tickets will be issued. Similarly, the founders of the NFT also have the right to decide how many copies they want for their work.
Sometimes it will be an exact duplicate, for example, just a ticket to a match. Each copy may be molded to be as close to the original as possible, adding changes, for example, tickets to the game but assigned seats. In rare cases, the founder of the NFT has only created a copy to represent this as a rare collectible.
As a result, NFT founders choose whether they will make a single copy or hundreds, if not thousands, of different copies of their work. However, in any case, each NFT will have a unique identifier and only one owner, and all information is public.
NFT founders get to choose the number of copies of their work
6.2 Authors will receive royalties in each exchange
The royalty-free function is still under development. However, it is the main reason why many creators are starting to turn to selling digital copies of their jobs as a new financial model.
As is known, the determination of royalties is usually done manually. This leads to low accuracy, causing many creators not to be paid commensurate with their efforts.
But with this operating mechanism, creators will automatically receive royalties every time their work is traded back and forth. For example, many streaming platforms pay royalties for their pieces to support many artists in the music industry.
7. Application of NFT in life
NFT has been applied in many fields thanks to the above unique features. Most prominent in digital artwork, collectibles, in-game items, and NFT sports.
NFT helps creators protect the copyright of their work
In the art field, the use of NFT has greatly solved problems related to copyright protection for works of artists and creators from areas such as painting, music, and cinema.
For example, a person can buy a work, digitize it, and attach it to a Token on the Blockchain platform to prove his ownership.
Many successful sales of NFT artworks have brought huge author profits. It can be up to hundreds of thousands of dollars. Typically, the painting Everyday: The First 5000 Days by artist Beeple was sold for 69.3 million USD (nearly 1600 billion VND).
The most unique and distinctive feature of NFT Gaming is that players can own in-game items and characters. Thanks to that, the business of trading also reduces risks.
Usually, the publisher is the items' owner and characters in the game for traditional games. Therefore, it is their responsibility to supply and sell such items. And to own, the player must spend some money to load into the game and proceed to buy them.
NFT helps usher in a new era for the Game industry
However, if the server has problems or the account is hacked, the player will lose all items. Thus, all efforts to collect will be wasted. Therefore, applying NFT to the Gaming field will help players have full ownership, control, and manage their items.
Each item will be associated with a data token, and players will be able to exchange the item with anyone who owns the currency of the Blockchain platform.
And all exchange activities will be recorded and stored on the Blockchain platform. No one can change or affect your item, not even the founding team.
7.3 Digitizing real assets
There will be many NFT projects for all areas of life in the future, digitizing all assets and intellectual property works rights. Now we can digitize land on the Blockchain platform to thoroughly solve the forgery of certificate of land use rights, which is always a significant and painful problem.
NFT will gradually turn physical assets into digital assets
Many items can be attached Token code for convenience in trading. For example, electronic tickets, legal documents, and signatures facilitate the exchange transparently, without errors.
8. Advantages of NFT
NFT has outstanding advantages that help it attract the attention and trust of many users. So what are those advantages? Discover the following with BHO Network.
8.1 Maximizing profits for authors
As mentioned above, the biggest advantage of NFT is applied in the digital market, where creators have the right to preserve ownership of their works without being controlled or sharing profits with third parties.
When an artist posts work on a platform, they generate a profit for the media to sell ads to their followers. Although these are not profitable, awareness will increase. The point is that they need to earn money to make a living.
Therefore, NFT will help artists and creators confidently own the copyright of their "brainchild" and receive royalties once their work is exchanged. The creator's address is part of the metadata, and this metadata cannot be changed.
8.2 Emphasis on Copyright
Thanks to NFT, copyright issues have been emphasized more than ever. In the past, audiences often ignored copyright issues, accepting only to enjoy art on free platforms. Now, they have a different view, and completely acceptable to spend a large amount of money on becoming the owner of the works of art.
NFT helps audiences raise awareness of copyright issues
Thus, becoming the sole owner of works has become a trend, helping collectors assert their reputation and enhancing their value in this game instead of just having access to them for free. The more people care, share, and use this content, the more value it brings to the author and the owner.
8.3 Leveraging the Potential of the Game Market
NFT has ushered in a new era for the Games market. Players can now play games for money through the "Play-to-earn" trend instead of simply spending hours in front of the computer screen playing games.
As we know, NFT benefits both players and game developers. The players have full ownership, management, and sale of the items to generate a profit when they are of higher value.
And when the game is no longer in development, these items do not disappear and are still owned by the player. It now can create value outside of the game context. The game development team will receive a royalty fee every time an item is exchanged on the marketplace.
9. Some risks when participating in the NFT market
The NFT market is rich, but there are many potential risks. Therefore, you need a complete knowledge of what NFT investment is, then avoid investing too much in this market for the following reasons:
Firstly, as mentioned above, the NFT market is extremely risky because its future is uncertain. Investors also do not have much data to analyze the performance of tokens. Therefore, it isn't easy to make precise judgments.
Although it is considered the future of property ownership and will develop even further in the future, like cryptocurrencies, many investors question whether this is a trend that will soon die out.
NFT has many potential risks for participants
Second, the value of NFT is based entirely on how much money other investors are willing to pay for them.
Meanwhile, investors also need to rely on fundamental indicators: technical and or economic, regardless of the investment sector, to determine this factor is driving prices and forming demand in the market. That means your NFT is likely to be sold for less than its actual value, or no one will buy your NFT.
Third, trading NFTs is similar to investors selling stocks for a profit. There will be capital gains taxes. Furthermore, since they're considered collectibles, they likely won't receive the preferential long-term capital gains rates that stocks do and are even more taxed.
Finally, cryptocurrencies used to purchase NFTs can also be taxed if they have increased in value since you bought them. Therefore, you need to carefully consider whether to add NFTs to your portfolio by consulting with tax experts.
10. How to choose NFT games with potential
In the current NFT projects, the NFT game industry receives excellent attention from investors. If you intend to get into this field, it is essential to evaluate potential NFTs. BHO recommends that you consider the following three factors with an NFT:
10.1 Through the community of players
When choosing a potential NFT Game, the first thing is to look at the game's regular player community and the interaction amounts on the game's official social networks.
It is necessary to look at the player community because the player rate is directly proportional to the game's potential. The higher the percentage of players, the more potential the game will have. Since then, these NFT assets have increased in value and are much sought after.
10.2 Through the company that owns the game
It is highly urgent to research the founding team and develop the project in investment. This will determine if this is a worthy investment as the revenue figures are still too small.
Therefore, investors need to build an overall game founders' picture about the experience, game's content quality, and communication when researching.
Ideally, the Game founding team should have experience in a Game Design position. It is better to have the achievements of founding famous titles.
Having experience in a Game Design position is necessary because a game that attracts many players is due to its beautiful, exciting, and attractive interface and features. This is the primary job of Game Designers.
10.3 Through Token price change
Studying the history of Token prices will give investors the clearest view of this Game project development. It is best for games that have been on the exchange for one month or more.
Ask yourself questions like: "Is the current price reasonable?", "Why is there a rise/fall at these periods?" and other questions depending on the project.
11. Some prominent NFTs in the market
Currently, there is a wide selection of NFT tokens on the market. However, BHO has compiled the following five most prominent names:
11.1 AXS - Axie Infinity
Axie Infinity is an NFT game about electronic combat
This is an NFT game about electronic war, in which players will breed, collect, buy, sell, raise and fight between characters in the Game through AXS tokens.
The unique feature of this game is that the players have the right to speak, vote, and contribute ideas and directions for the subsequent development of Axie Infinity. In addition, players can participate in the Staking mechanism to earn more AXS tokens.
Moreover, this is an NFT Token created by Vietnamese people and recently received a lot of praise from domestic and foreign press in the NFT Game market.
11.2 Chiliz - CHZ
Chiliz is a social networking platform for football fans
Chiliz is a technology platform based on the Ethereum Blockchain of the website Socios.com. This is a social networking platform for football fans, mainly on combat sports, football and games.
The Chiliz platform allows clubs to interact with fans through various channels, including quizzes, games, VIP gifts, and exclusive fan promotions.
Fans can own Cryptocurrency and vote for their favorite clubs and teams. The most remarkable thing about this platform is that sports clubs and groups participating in the Chiliz system will be paid.
11.3 Theta Network - THETA
Theta Network is a video distribution network using famous Blockchain technology
Theta Network is a very famous video distribution network using Blockchain technology. To earn THETA Token, users will forward videos to other users who watch similar content.
11.4 Flow - FLOW
Flow is a Blockchain platform that helps users build apps, games, and many other digital assets. In addition, the platform has also solved the problems of high transaction fees and network congestion, enabling more effective and efficient development of applications.
Flow owns a lot of practical uses
In addition, this platform has also spawned many famous games like Krypto Kitties and NBA with the contributions of many big enterprises such as Samsung, Binance, .. and many big university names, affirming the high level of prestige of this platform.
11.5 Enjin Coin - ENJ
This Blockchain technology platform allows users to exchange transactions and earn money while playing video games. In addition, the platform makes it possible for game creators to tokenize in-game items through the technology of the Ethereum Blockchain.
Blockchain technology platform brings many benefits to users and the creative team
As for ordinary users, you may use the platform to create digital assets such as NFTs, in-Game items, or digital vouchers.
Above is the content of the article "What is NFT?”, and the NFT knowledge that you need to invest in. BHO Network hopes that investors have somewhat grasped the basic understanding of NFT. If you have any other questions or comments, don't hesitate to visit the Website https://bho.network/ to comment below and discuss with BHO!
Published on January 14, 2022
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